People who don't save for retirement

[Anonymous]

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Anonymous wrote:What are people who don’t make enough to live supposed to do? It’s a privilege to save for retirement. It really is.

Asian American here. I was a child of immigrants. DH and I support my parents and his mom. We know many adult Asian Americans supporting their elderly parents. It is actually quite common.

Do you feel resentful about this? Genuinely curious.

No, I’m not resentful at all. They moved to this country and did the best they could. I always had housing and food. It isn’t like they spent frivolously and wasted money. They just never had money.

I’m surprised at Americans who seem to be able to turn their backs on their family.

Psst. You're an American. Not all Americans turn their back on their family.

My family has been here since the mayflower. I work my ass off to make sure I can care for them if they need it. My mom has needed help to a small extent. My dad has been independent. And we've helped other family to small degrees. But I know (and my mom knows) that I always have their backs.

NP-I'm not from the US but I don't feel like I want to have my parents' or in-laws' back: they did not have my back as an adult in any way so why should I have theirs? There's something really not right about having to be fully independent at 18 in all ways and then still have to care for people in their old age as you yourself never had help. And as a parent I feel even more strongly about this: support should flow down to kids, not up to parents. I would feel like an absolute failure and bad person if my adult kids had to financially worry about me.

Yeah I can totally understand this.

My issue is not that my parents haven't been supportive, they have, but they've also made some poor financial decisions over the years that led them to having minimal savings. Even now it seems like they are living above their means- they sold their house because despite living there 30 years had not paid off the mortgage due to multiple refinancings, and now rent a "luxury" townshouse that I doubt they can afford longterm. But of course my mom still wanted the full basement, the garage, etc. They both still work part-time in their 70s so I uess it works for now but I'm sure the days are numbered there.

My in-laws are exactly like that: sold their house (which they had a downpayment for thanks to fil's parents) which they had refinanced, stayed very complacent as renters in a great apartment and had to move three times since, each time for more and more money because they only want luxury. Both of them still work as well. I absolutely do not want to be on the hook for their bad decisions when we ourselves made a lot of sacrifices to be financially stable. I really don't understand the way they play ostrich with finances. They recently adopted a dog and wanted to pay as little as possible to adopt, but ended up getting a dog with medical needs and expensive meds. They thought: "cheap dog now, great!" instead of "how much is this dog going to cost long term?" and even inquiring about the cost of the meds. It's maddening how they live their lives without thinking of the future. I would not care if I didn't feel we are their plan B.

This is it right there in bold for me. I do not want to "pay" for anyone else's bad money choices. That is on them. And, yes, I am watching what my family member is doing with his money right now.

Presently, I don't say a word unless asked but I am watching. When things eventually go south as they very well may, I will remember how they (mis)handled their money and will not step in to help them. If I have no influence on how they are spending their money now, I will not step in with my money later.

This!!! You are not obligated to help those who make bad choices (continuously) in life.
Everyone has the choice to live how they want, but they do NOT have the choice to expect others to fix it later.

[Anonymous]

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Anonymous wrote:I will be working until I die. I can't afford to retire. That's for rich people.

Same. I live paycheck to paycheck. I'm single and don't have the benefit of a second income. It doesn't leave much to save for retirement.

Find a roommate and split expenses.

Beyond age 24/25, who wants a roommate? It can create so many issues. You sign a 1 year lease, they want to move at the end, so you have to relocate (and/or find new roommates) to a 1 bedroom, you need at least a few days of overlap, you have to pay movers or do the work yourself, etc. If you have to pay for 1 extra month because of moving apartments, you have negated the savings of having roommates.

My kid has seen it happen with too many of their friends, so they happily pay the premium for their own 1 bedroom and space.

I rented a room in a group house until I was 32. I saved a lot of money that way. The only reason I moved out was when my grandmother died and left me her condo. We all had individual leases with our landlord so there were no issues with people moving out and needing to move or pay their portion of the rent. DCUMs are such snobs.

Outside of college housing, there are not many places where landlords rent "rooms" to individuals with each having their own lease. The scenario I described above is real and can end up costing you $2K+, which negates the savings of having a roommate.

Not true. My son lives in a house like this in Baltimore now and he lived in one in DC. Both after college. Not many college grads can afford their own place anymore.

[Anonymous]

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Anonymous wrote:My mother, who is 78, is still working. She just historically makes so many horrible financial decisions, one after the other.

She does own a few properties other than her home and she has finally agreed to sell one. I am supporting her because I don't want her on the street (she was living in a hotel recently) but I gave her an ultimatum to sell a vacant rental property because I can't afford to keep floating her. She also cashed in some stock that she inherited from my father when he died.

If she is living in a hotel while her rental property sits empty, I'd worry about her mental acuity at this point.

PP said she is prone to bad financial decisions, of course her mental acuity was never great to begin with!

she should have darwin'd out stop enabling her

[Anonymous]

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Anonymous wrote:I will be working until I die. I can't afford to retire. That's for rich people.

Same. I live paycheck to paycheck. I'm single and don't have the benefit of a second income. It doesn't leave much to save for retirement.

Find a roommate and split expenses.

Beyond age 24/25, who wants a roommate? It can create so many issues. You sign a 1 year lease, they want to move at the end, so you have to relocate (and/or find new roommates) to a 1 bedroom, you need at least a few days of overlap, you have to pay movers or do the work yourself, etc. If you have to pay for 1 extra month because of moving apartments, you have negated the savings of having roommates.

My kid has seen it happen with too many of their friends, so they happily pay the premium for their own 1 bedroom and space.

I rented a room in a group house until I was 32. I saved a lot of money that way. The only reason I moved out was when my grandmother died and left me her condo. We all had individual leases with our landlord so there were no issues with people moving out and needing to move or pay their portion of the rent. DCUMs are such snobs.

Outside of college housing, there are not many places where landlords rent "rooms" to individuals with each having their own lease. The scenario I described above is real and can end up costing you $2K+, which negates the savings of having a roommate.

Not true. My son lives in a house like this in Baltimore now and he lived in one in DC. Both after college. Not many college grads can afford their own place anymore.

I lived in a group house with young professionals until I turned 30. I knew a lot people in similar situations at that time. I’m 51 now. I don’t think this is a new phenomenon.

[Anonymous]

Anonymous wrote:Everytime I look up what I should have saved up, I get stats on what the average American actually has. And they don’t have much. So what do all these people actually do when they reach their 60s and 70s?

Elon said we are entering "times of plenty" and AI will cancel money. I believe him.

[Anonymous]

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Anonymous wrote:I will be working until I die. I can't afford to retire. That's for rich people.

Same. I live paycheck to paycheck. I'm single and don't have the benefit of a second income. It doesn't leave much to save for retirement.

Find a roommate and split expenses.

Beyond age 24/25, who wants a roommate? It can create so many issues. You sign a 1 year lease, they want to move at the end, so you have to relocate (and/or find new roommates) to a 1 bedroom, you need at least a few days of overlap, you have to pay movers or do the work yourself, etc. If you have to pay for 1 extra month because of moving apartments, you have negated the savings of having roommates.

My kid has seen it happen with too many of their friends, so they happily pay the premium for their own 1 bedroom and space.

I rented a room in a group house until I was 32. I saved a lot of money that way. The only reason I moved out was when my grandmother died and left me her condo. We all had individual leases with our landlord so there were no issues with people moving out and needing to move or pay their portion of the rent. DCUMs are such snobs.

Outside of college housing, there are not many places where landlords rent "rooms" to individuals with each having their own lease. The scenario I described above is real and can end up costing you $2K+, which negates the savings of having a roommate.

Not true. My son lives in a house like this in Baltimore now and he lived in one in DC. Both after college. Not many college grads can afford their own place anymore.

I lived in a group house with young professionals until I turned 30. I knew a lot people in similar situations at that time. I’m 51 now. I don’t think this is a new phenomenon.

Dh also lived in a group house until we married. There were 5 bedrooms, 2 baths with 5 separate leases. The head roommate charged each person 1/5 of the utilities each month.

[Anonymous]

To invest you need some money. If you're working to survive how much money do you have that's just laying around??

I mean you can't save for anything if you don't make enough to live.

It's nothing to do with the choice of investing for many.

We live in a purely capitalistic society. That means that some have more means than others. For a substantial % of Americans they cannot afford to invest for retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Everytime I look up what I should have saved up, I get stats on what the average American actually has. And they don’t have much. So what do all these people actually do when they reach their 60s and 70s?

Elon said we are entering "times of plenty" and AI will cancel money. I believe him.

In the history of the world do you know the one thing every civilization had in common?

A barter system that included currency. Elon is talking out his ass. Human nature requires a sense of leverage among people - as long as we're not robots - money unfortunately will be in demand.

AI will never be able to wipe out this fact unless it makes humans nonexistent!

[Anonymous]

Anonymous wrote:People really don't know what they are doing with money. My MIL just told me this weekend that she needs to work a few more years to hit her retirement goal $$. A bit later she told me she cashed out a pension that was more than expected so she could redo her home office with nice built ins, French doors, wallpaper, etc. And she told me she sold some company stocks, bought a bunch of Pharma stocks hoping they would increase more quickly, but now they have gone down a bunch. She also just bought a new car with her savings, so she needs to build that back up. So basically, she is using retirement/emergency money to fund her lifestyle, and the goalpost keeps moving because she won't stop touching the funds. This is a college educated person who spent her career working in finance.

I think people do save. But they end up tapping into their savings over the years for various things. They justify it by saying they need the car, the home renovation will increase their home value, etc. But treating retirement funds like this does not help.

But statistically retiree's expenses will drop the older they get. What good will it do her to have a pile of money later she won't use?

[Anonymous]

Anonymous wrote:

Anonymous wrote:People really don't know what they are doing with money. My MIL just told me this weekend that she needs to work a few more years to hit her retirement goal $$. A bit later she told me she cashed out a pension that was more than expected so she could redo her home office with nice built ins, French doors, wallpaper, etc. And she told me she sold some company stocks, bought a bunch of Pharma stocks hoping they would increase more quickly, but now they have gone down a bunch. She also just bought a new car with her savings, so she needs to build that back up. So basically, she is using retirement/emergency money to fund her lifestyle, and the goalpost keeps moving because she won't stop touching the funds. This is a college educated person who spent her career working in finance.

I think people do save. But they end up tapping into their savings over the years for various things. They justify it by saying they need the car, the home renovation will increase their home value, etc. But treating retirement funds like this does not help.

But statistically retiree's expenses will drop the older they get. What good will it do her to have a pile of money later she won't use?

As long as you can afford to manage retirement yourself (without asking ANYONE else for help), then spend how you want. But memory care/assisted living/nursing care is expensive. And while stats say most are only in 6-18 months, I have personal stats that say otherwise. Aunt and uncle who both lived to 90/91. One was 7 years in memory care, the other was 3.5 years in nursing care. Those run 8-10K+/month. And neither case would be cheaper to manage at home (unless you want to quit your job and be a 24/7 nurse and are capable of lifting a 200lb man).

So I'd rather take more moderate vacations and be prepared for $500-750K+ in LTC later in life, so I can live comfortably. Both of those relatives where aware of their surroundings and mentally sound until near the end (even the memory care, they were advancing in dementia, but still "recognized" family and could recall their early years in great detail).

So point is you might need to use it later. Also, I'd rather be able to travel and enjoy life once we are empty nesters. I find trips with our 20 somethings and their SO much more fun than traveling when the kids were younger....KISS when they are younger and enjoy more once they greatly appreciate it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I will be working until I die. I can't afford to retire. That's for rich people.

Same. I live paycheck to paycheck. I'm single and don't have the benefit of a second income. It doesn't leave much to save for retirement.

Find a roommate and split expenses.

Beyond age 24/25, who wants a roommate? It can create so many issues. You sign a 1 year lease, they want to move at the end, so you have to relocate (and/or find new roommates) to a 1 bedroom, you need at least a few days of overlap, you have to pay movers or do the work yourself, etc. If you have to pay for 1 extra month because of moving apartments, you have negated the savings of having roommates.

My kid has seen it happen with too many of their friends, so they happily pay the premium for their own 1 bedroom and space.

I lived like this until 30 and invested aggressively in my 20s.

[Anonymous]

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Anonymous wrote:I know many immigrants who came to the U.S. later in life to be with their adult kids.
They have section 8, SSI and Medicaid. Their adult kids help them with food and other essentials. They manage to save part of their SSI and their kids usually inherit a bunch of cash.

The worst situation is when someone works all their life and gets SS that is too high for Medicaid and other benefits but not enough to get by. I feel bad for Americans who are in this predicament.

l don’t understand your statement about the worst situation. Don’t retirees 65+ regardless of income get Medicare? If someone chooses to retire early they didn’t “work all their life” - why do you feel bad for them?

NP. The PP didn't articulate it well, but there are a lot of retirees who have too many assets to qualify for Medicaid (which is different than Medicare) but need long-term nursing home care. These people need to spend down all their assets until they qualify for Medicaid. Working hard all your life to amass modest savings to then fork it over to the nursing home is painful. There are ways to get around this if you plan ahead of time, but most people don't.

Maybe I didn’t articulate it well but you are talking about something entirely different, the assets. I am talking about income, like monthly SS benefit.
Assets are another problem but it’s easier to solve, just deed your house to your kids while still healthy, done.
However your ss benefit is what it is.

If you deed your house to your kids now, the tax basis is its current value, whereas if you place it in a trust the tax cost basis will be its value on date of death.

I don’t understand it but I guess it comes down to paying more taxes?
Why not gift the house the moment the kid turns 18?
But maybe you’re right and trust is better.
Always something with all these American systems so that you are for ex to pay some kind of middleman! Ugh

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I know many immigrants who came to the U.S. later in life to be with their adult kids.
They have section 8, SSI and Medicaid. Their adult kids help them with food and other essentials. They manage to save part of their SSI and their kids usually inherit a bunch of cash.

The worst situation is when someone works all their life and gets SS that is too high for Medicaid and other benefits but not enough to get by. I feel bad for Americans who are in this predicament.

l don’t understand your statement about the worst situation. Don’t retirees 65+ regardless of income get Medicare? If someone chooses to retire early they didn’t “work all their life” - why do you feel bad for them?

NP. The PP didn't articulate it well, but there are a lot of retirees who have too many assets to qualify for Medicaid (which is different than Medicare) but need long-term nursing home care. These people need to spend down all their assets until they qualify for Medicaid. Working hard all your life to amass modest savings to then fork it over to the nursing home is painful. There are ways to get around this if you plan ahead of time, but most people don't.

Maybe I didn’t articulate it well but you are talking about something entirely different, the assets. I am talking about income, like monthly SS benefit.
Assets are another problem but it’s easier to solve, just deed your house to your kids while still healthy, done.
However your ss benefit is what it is.

If you deed your house to your kids now, the tax basis is its current value, whereas if you place it in a trust the tax cost basis will be its value on date of death.

I don’t understand it but I guess it comes down to paying more taxes?
Why not gift the house the moment the kid turns 18?
But maybe you’re right and trust is better.
Always something with all these American systems so that you are for ex to pay some kind of middleman! Ugh

If you give your house to your kids at age 18, you (the donor) will need to pay gift taxes on its value over $19,000. The kids will have to keep your cost basis, so if they sell, they will owe higher taxes on it than if they were to inherit it, which establishes a new cost basis. The kids will have to pay all real estate taxes and maintenance, which they may not be able to do easily at age 18. Also, the new owner can choose to kick you, the parent, out once they own the house.

[Anonymous]

Some keep working, which must get really hard at some stage.

[Anonymous]

Anonymous wrote:Some keep working, which must get really hard at some stage.

This. My 67-year-old cousin just relocated and is looking for office work, which she's not finding. She thinks she'll have to apply to work in supermarkets. I don't understand how this is sustainable. If social security and savings are not enough for her now, will they be enough when she physically can't work anymore?